Sensitech Inc. v. Limestone Fze

548 F.Supp.3d 244

SENSITECH INC., Plaintiff,

v.LIMESTONE FZE and Samer Alwash, Defendants.

Civil Action No. 20-11043-NMG

United States District Court, D. Massachusetts.

Signed July 9, 2021

Shepard Davidson, Gregory S. Paonessa, Burns & Levinson LLP, Boston, MA, for Plaintiff.

Lee C. Bromberg, James J. Thomson, McCarter & English, LLP, Boston, MA, Alexander L. Ried, McCarter & English, LLP, Stamford, CT, for Defendants.

Memorandum & Order

GORTON, United States District Judge This action arises out of a contract dispute between Sensitech Inc. ("Sensitech" or "plaintiff"), LimeStone FZE ("LimeStone") and its owner, Samer Alwash ("Mr. Alwash" or "individual defendant") (collectively, "defendants"). Pending before the Court are Mr. Alwash's motion to dismiss the complaint for lack of personal jurisdiction and Sensitech's motion to dismiss the defendants’ counterclaims for failure to state a claim. For the reasons that follow, the motion of defendant Alwash will be allowed and plaintiff's motion will be allowed, in part, and denied, in part.

I. Background

A. The Facts

Sensitech is a Delaware corporation with its principal place of business in Massachusetts. It manufactures and sells products and services which monitor the quality, integrity and security of cargo for its customers during the interstate and world-wide transport of those items. Since 2008, Sensitech has worked with LimeStone to distribute its products throughout the United Arab Emirates ("the UAE") and Saudi Arabia. LimeStone is a Dubai-based company that distributes Sensitech's monitors. It is allegedly owned and controlled by Mr. Alwash, an individual who resides in Amsterdam, the Netherlands and who serves as the company's Managing Director.

In or about 2015, Sensitech and LimeStone executed a Distributor Agreement ("the Agreement"), pursuant to which LimeStone bought "Cold Chain" monitors and related products from Sensitech on credit, re-sold them to end-users in the UAE and Saudi Arabia and then reimbursed Sensitech. The Agreement provided, inter alia, that LimeStone would be the exclusive distributor of Sensitech's products within that region, although it reserved to Sensitech the right to sell and service directly its own products there.

To support that arrangement, Sensitech submits that it also disclosed certain confidential information to LimeStone, including customer-specific pricing, product development roadmaps and Professional Services trade secrets, plans and documents. The Agreement authorized LimeStone to utilize that information during the course of the business relationship but required it to return all such information at the expiration of the contract.

The Agreement initially was set to expire in March, 2016, but, via two amendments, was ultimately extended through December, 2018, after which Sensitech chose not to renew. By that date, LimeStone apparently owed Sensitech nearly $115,000 for products LimeStone had purchased on credit, a debt which it still has not paid. It also purportedly failed to return the confidential information of Sensitech which presumably remains in the possession, custody or control of Mr. Alwash and LimeStone.

Sensitech alleges that, in addition to failing to pay its debt and returning Sensitech's confidential information, defendants have also engaged in a variety of other activities designed solely to harm Sensitech's business. For example, Mr. Alwash allegedly posted on LimeStone's LinkedIn page a secretly recorded dinner conversation with a Sensitech representative during which a variety of Sensitech's confidential information was discussed ("the video recording"). Furthermore, after Sensitech filed this action, Mr. Alwash supposedly published at least three posts to his personal LinkedIn page stating that Sensitech "is a criminal organization."

B. Procedural History

Accordingly, in May, 2020, Sensitech sued Limestone and Mr. Alwash in Massachusetts Superior Court, after which defendants removed the action to this Court. In June, 2020, plaintiff filed an amended complaint, alleging against LimeStone breach of contract (Count I)and breach of the covenant of good faith and fair dealing (Count II); and, against both defendants, Conversion (Count III); violation of the Massachusetts Trade Secrets Act, M.G.L. c. 93, § 42A (Count IV); tortious interference (Count V); common law misappropriation (Count VI); violation of M.G.L. 93A ("Chapter 93A") (Count VII) and defamation (Count VIII). It also seeks to enjoin LimeStone from continuing 1) to represent in any forum that LimeStone is an authorized distributor of Sensitech's products, 2) to attempt to sell Sensitech's products to end-users, 3) to disclose Sensitech's confidential information on LinkedIn and 4) to post on any social media platform matters that are clearly false, defamatory or designed to inflict harm on Sensitech.

Also in June, 2020, plaintiff filed a motion for a temporary restraining order and preliminary injunction against defendants which this Court allowed after a hearing. One day prior to the hearing, Alwash submitted a pro se "Declaration of Samer Alwash, in support of Special Appearance to dismiss Complaint for lack of personal jurisdiction" in which he asserts that the Court lacks personal jurisdiction over him because 1) he is not a citizen of the United States, has never resided in this country and has never been to Massachusetts, 2) he owns no property, has no bank account and engages in no business activities in the Commonwealth and 3) he has not consented to jurisdiction in this state. During the hearing, Mr. Alwash appeared without counsel, presented no rebuttal in opposition to Sensitech's allegations or to the entering of the preliminary injunction but instead simply repeated his argument that this Court lacks personal jurisdiction over him.

Mr. Alwash has, since, retained counsel and the Court has subsequently modified the preliminary injunction which remains in effect. The individual defendant also continues to contest this Court's exercise of personal jurisdiction over him and a motion to dismiss for lack of personal jurisdiction, filed by counsel, remains pending.

Moreover, while purporting to preserve that jurisdictional challenge, defendants filed an answer to the amended complaint in January, 2021, in which they assert 12 counterclaims against Sensitech. Those counterclaims, in large part, mirror plaintiff's claims, including breach of contract, tortious interference, breach of the covenant of good faith and fair dealing and misappropriation of trade secrets. Plaintiff has moved to dismiss those counterclaims pursuant to Fed. R. Civ. P. 12(b)(6).

II. Defendant's Motion to Dismiss the Complaint for Lack of Personal Jurisdiction

A. Legal Standard

On a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(2), the plaintiff bears the burden of showing that personal jurisdiction is 1) statutorily authorized and 2) consistent with the Due Process Clauses of the United States Constitution. See Cossart v. United Excel Corp., 804 F.3d 13, 18 (1st Cir. 2015) ; United States v. Swiss Am. Bank, Ltd., 274 F.3d 610, 618 (1st Cir. 2001).

Where, as here, the Court will decide the motion without first holding an evidentiary hearing, the Court applies the "prima facie" standard of review and takes the plaintiff's

properly documented evidentiary proffers as true and construe[s] them in the light most favorable to [plaintiff's] jurisdictional claim.

A Corp. v. All Am. Plumbing, Inc., 812 F.3d 54, 58 (1st Cir. 2016). A plaintiff cannot, however, rely on the "unsupported allegations" in its complaint but "must put forward evidence of specific facts to demonstrate jurisdiction exists." Id. (internal citations omitted); see also Phillips v. Prairie Eye Center, 530 F.3d 22, 26 (1st Cir. 2008) (explaining that, in order for a plaintiff to make a prima facie showing of jurisdiction, it "ordinarily cannot rest upon the pleadings but is obliged to adduce evidence of specific facts").

In a diversity suit, this Court acts as "the functional equivalent of a state court sitting in the forum state." See Astro–Med, Inc. v. Nihon Kohden America, Inc., 591 F.3d 1, 8 (1st Cir. 2009). As such, to make a prima facie showing of personal jurisdiction, the plaintiff must demonstrate that the exercise of jurisdiction 1) is permitted by the forum's long-arm statute, and 2) coheres with the Due Process Clause of the Fourteenth Amendment of the United States Constitution ("Fourteenth Amendment") by showing that each defendant has "minimum contacts" with Massachusetts. Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 52 (1st Cir. 2002).

1. Massachusetts Long-Arm Statute

The requirements of the Massachusetts long-arm statute, M.G.L. c. 223A § 3, are substantially similar to (although potentially more restrictive than) those imposed by the Fourteenth Amendment. See Copia Commc'ns, LLC v. AMResorts, L.P., 812 F.3d 1, 4 (1st Cir. 2016) (noting that "[r]ecently, however, we have suggested that Massachusetts's long-arm statute might impose more restrictive limits on the exercise of personal jurisdiction than does the Constitution"). The statute provides that the exercise of personal jurisdiction by a court in Massachusetts is proper in any action arising from, inter alia, a defendant:

(a) transacting business in this commonwealth; ...

(c) causing tortious injury by an act or omission in this commonwealth; or

(d) causing tortious injury in this commonwealth by an act or omission outside this commonwealth if he regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in this commonwealth.

M.G.L. c. 223A, § 3.

2. Due Process

The Court's jurisdiction may be either "specific" or "general". Swiss Am. Bank, 274 F.3d at 618. Specific jurisdiction requires a "demonstrable nexus" between the claims of the plaintiff and the defendant's contacts in the forum state. I...